Graeme Leach is chief executive and chief economist of Macronomics, a macroeconomic, geopolitical and future megatrends research consultancy.

Like tearing down the Berlin Wall, tearing down our tariffs will bring greater liberty and freedom (Source: Getty)

Graeme Leach

The Aussies are itching for a free trade deal and the Prime Minister is said to want to lead the world against protectionism. For most people such issues are economic, pure and simple. Unfortunately, what is missing is the moral dimension, which needs to be far better understood.

Adam Smith argued that “all commerce that is carried on betwixt any two countries must necessarily be advantageous to both” and therefore “all duties, customs and excise on imports should be abolished … and liberty of exchange should be allowed with all nations.”

Donald Trump's protectionist rants are a distortion of the truth (Source: Getty)

So where does this leave us with regard to free trade deals and leading the world against protectionism? There is a real risk at present that the UK will chase free trade deals all over the world and Liam Fox will accumulate more air miles than any man in history. But while the secretary of state is at 35,000 feet, consumers and businesses in the UK will continue to be deprived of their liberty due to a continuing tariff wall. Unilateral free trade makes economic and moral sense.

The risk in chasing free trade deals is that we become too focused on the back door of the factory (the cost of what goes out), and stop thinking about what happens at the front (the cost of what comes in).

If the Prime Minister wants to lead the world against protectionism, Britain needs to lead by example. Leaving the EU customs union and replacing it with tariff-lite is not leading by example. Leadership is displayed in sacrifice. Unilateral free trade is not cost free, as there would be a negative impact on previously protected sectors. But that sacrifice would reap a reward in the form of higher productivity. Political populism is exploding around the globe. Protectionism flourishes in such an environment. This is a defining moment for Britain in the twenty-first century, just as the abolition of the Corn Laws was a defining moment in the nineteenth century. We did the right thing then, and we can do the same now.

I seem to remember President Reagan shouting over the Berlin Wall that, “if you seek liberalisation, come here to this gate. Mr Gorbachev, open this gate. Mr Gorbachev, tear down this wall.” Tearing down this wall (tariffs) should be the post-Brexit mantra.

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